A couple years back, the DOL announced it was considering a rule that would require employers to notify workers — in writing — of their rights under the FLSA. Under this rule, employers would have to perform a written classification analysis for every exempt employee.

After an analysis is complete, the employer would have to share the information with the worker.

Companies would also be required to retain the analysis documents in the event of a DOL investigation.

More paperwork for you

According to attorneys Thomas Wilde and Andrea Lewis of the law firm Vedder Price, the DOL recently published a notice in the Federal Register requesting public comments on its “proposal to collect information about employment experiences and workers’ knowledge of basic employment laws so as to better understand employees’ experience with worker misclassification.”

And that, the attorneys say, could mean the feds are again gearing up to focus on employee misclassification issues.

Here’s some background on the situation, according to Lewis and Wilde:

A couple of years ago, the DOL said it’d be releasing proposed rules on the “Right to Know Under the Fair Labor Standards Act,” but failed to do so. The agency then pushed back the issue to its “long-term action” agenda.

But the new survey, which is scheduled to run until May, could signal that the issue’s on the table again.

What’s it all mean? If adopted, the rules would mean more paperwork for HR and Payroll. “(Since) employers are not currently required to notify workers or the DOL of the workers’ status, and they are not required to provide information to all employees on how their pay is calculated, these regulations would place an added burden on employers,” Wilde and Lewis wrote. “Further, considering the increasing amount of wage and hour litigation, this type of rule may lead to even more lawsuits filed on behalf of workers alleging they were misclassified.”

The guidance comes  in the form of an Administrator Interpretation Letter, and its purpose was to clarify these three areas:

Who qualifies?

Priority No. 1 for the DOL was to clarify when an employee is eligible to take FMLA leave to care for a son or daughter.

The letter says that when the child is younger than 18 years old, all the parent needs to show is that the child is suffering from a serious health condition and needs care as a result.

But when it comes to children 18 and older, things get much more complicated.

For a parent to take FMLA to care for an adult son or daughter, the child must:

1. have an ADA-defined disability
2. be incapable of self-care due to that disability
3. have a serious health condition, and
4. be in need of care because of the serious health condition.

So to be clear, any child 18 or older can’t have a serious health condition alone for the parent to be FMLA-eligible. The child must also have a disability.

In addition, the interpretation letter drives the point home that the age of the child at the onset of the disability does not matter for FMLA purposes. So if a child developed a disability at age 16 and it carries over into adulthood, that disability can still be a contributing factor in meeting the requirements listed above.

ADA Amendments Act now defines disability

The Americans with Disabilities Act Amendments Act (ADAAA) significantly expanded the definition of a “disability.”

And in the interpretation letter the DOL endorsed the changes to the definition of a disability the ADAAA put in place and the impact they have on the FMLA.

It reiterated that the FMLA relies on the ADA’s definition of a disability when determining if a parent qualifies for leave to care for an adult child. It then went on to say that the expanded definition will enable more parents to take FMLA-protected leave to care for their adult sons or daughters with disabilities.

It also added that employers should lean in favor of providing “broad coverage” when it comes to determining whether an adult child has a disability, and employers shouldn’t conduct an “extensive analysis” of whether a health condition is actually a disability.

One example the letter provides: An employee’s 37-year-old daughter suffers a shattered pelvis in a car accident, substantially limiting several life activities — like walking, standing and sitting.

Although she’s expected to recover, she won’t be able to walk for at least six months (the amount of time a medical condition must last to be considered a disability under the ADA). As a result, she’ll need assistance with at least three activities of daily living — like bathing, dressing and maintaining her residence.

Her shattered pelvis also qualifies as a serious health condition.

Due to these factors, her parent will qualify for FMLA leave.

New guidance for military members

The interpretation letter also clarified that parents of adult children who’ve sustained an injury or illness as a result of service in the military may take up to an additional 12 weeks of leave — on top of the 26 weeks the law provides — in a subsequent year.

An example from the DOL: A father exhausts his 26 weeks of military caregiver leave to care for his 20-year-old son, who sustained extensive burn injuries.

In the following FMLA leave year, the father can take an additional 12 workweeks of FMLA leave as his son undergoes additional skin graft procedures and is substantially limited in his ability to perform several life activities — bathing, dressing and eating.

In this case, the burns count as a serious health condition because they require continuing treatment by a health care provider.

Changes are coming to an arcane labor law entitled the Labor-Management Reporting and Disclosure Act, which has been in force since 1962, according to a recent notice from the Department of Labor.

Attorney Doug Hass recently wrote about the proposed changes on the Franczek Radelet blog.

A summary of Hass’s report:

The LMRDA requires employers to file reports with the DOL when they hire consultants or contractors (including attorneys) to persuade employees on the issue of unions.

However, the LMRDA has always contained an exception to the reporting requirement for “advice” given to an employer. That exception included an attorney’s drafting of letters or speeches to employees or an attorney’s legal reviews of employer communications.

Only if an attorney (or other consultant or contractor) met directly with employees would the activities become reportable, writes Hass.

The rules get tighter

The NLRB proposal blows those exceptions out of the water. The new proposal, set to go into effect in April, would limit the the “advice exception” to advising employers on what they may lawfully say to employees, on their compliance with the law, or on general guidance about how the NLRB operates.

That means any services provided to an employer that could directly or indirectly persuade workers on the issue of union organizing would become reportable — regardless of whether the outside consultant has direct contact with workers.

Hass lists some of the newly “reportable” activities:

• Drafting, revising, or providing written materials for presentation, dissemination, or distribution to employees
• Drafting, revising, or providing a speech for presentation to employees
• Drafting, revising, or providing audiovisual or multi-media presentations for presentation, dissemination, or distribution to employees
• Drafting, revising, or providing website content for employees
• Developing or administering employee attitude surveys concerning union awareness, sympathy, or proneness
• Training supervisors or employer representatives to conduct individual or group employee meetings
• Coordinating or directing the activities of supervisors or employer representatives
• Developing personnel policies or practices, and
• Conducting a seminar for supervisors or employer representatives.

New headaches, expense

What’s it all mean? That the feds have just added to the time, expense and legal exposure faced by an employer who’s fighting a unionization push from employees.

Here’s Hass’s observation about the effect of the changed regs:

The DOL estimated that its new rules will triple the number of reports that employers must file and increase the reports filed by firms engaged in persuader activities twelve-fold …

The newly defined standards, particularly when combined with the LMRDA’s potential criminal sanctions for willful non-reporting, could substantially interfere with an employer’s attorney-client relationship, disrupt an employer’s ability to obtain legal advice when confronted by union activity, and have a chilling effect on employer free speech during such campaigns.

Under ERISA-covered plans, these rebates are now considered plan assets and must be used in one of three ways:

• If the employer covered the entire cost of group health insurance, it’s free to keep the entire rebate
• If plan participants paid the entire cost of coverage, the entire rebate must be distributed among them, and
• If participants and the employer shared in the cost of coverage (as is the case most often), participants must receive rebate funds in proportion to the percentage of the premium they paid.

Employers issuing funds to plan participants can do so either by reducing future plan premiums or by cutting them a check.

Insurance rebates to former participants

The DOL also stated that it’s OK for an employer to decide not to issue funds to former plan participants (who paid premiums into the plan for the year the rebate was issued) if the cost of distributing shares of the rebate would outweigh the benefit.

In addition, the DOL says if the cost of distributing shares to active participants is prohibitively costly, it’s OK to use the rebate for other purposes — namely to reduce future participant premiums or to provide enhanced benefits.

The rebate checks were due August. 1, and will be due on that date every year moving forward.

The healthcare reform bill contained a requirement that insurance companies spend at least 80 cents of each premium dollar they collect over the course of a year (85 cents for plans in the large group market) on medical care and healthcare quality improvement.

Those that spend less than that have to issue rebates to policy holders.

As a result, it was expected insurers would issue more than $1 billion in refunds this August.

Info: DOL Technical Release 2011-04.

If your provider came up short and failed to give you what you needed to pass all the fee data on to your employees, you’ve got to speak up — and you have a new place to do it.

New DOL final fee disclosure rule

The Department of Labor (DOL) just published a new fee disclosure rule changing the mailing and email addresses you should use to give notice a provider failed to provide fee data to you:

• If notifying via snail mail, use: U.S. Department of Labor, Employee Benefits Security Administration, Office of Enforcement, P.O. Box 75296, Washington, DC 20013
• If notifying electronically, visit: Dol.gov/ebsa/regs/feedisclosurefailurenotice.html

Remember, if you don’t get the required fee disclosure info from your provider, you have to request it.

Plan sponsors have until Aug. 31 to create and distribute retirement plan fee disclosure documents to participating employees.

Are the fees ‘reasonable’?

For those of you whose providers have coughed up the fee info, it’s now up to you to determine whether those fees are “reasonable.”

Sites like BrightScope.com, which rates 401(k) plans, can help you determine if your retirement plan and its fees are in line with other offerings out there. You’ll want to benchmark as much as possible.

If you find your plan lagging in some areas, then the real work begins. The DOL’s made it clear you can’t continue with a plan that’s charging excessive fees, so you’ll have to start shopping for a new, lower-cost plan provider pronto.

Dealing with employee fallout

Chances are, even if your plans fees are reasonable, it’ll come as a shock to many employees that they’re paying anything at all.

For ideas on how to best break the news to employees, check out the best practices HR Morning laid out this past spring for communicating 401(k) fees to employees.

It’s because they have to file a complaint with the Department of Labor (DOL) to have the situation rectified. The DOL can then cite companies for violating the law. And in at least 23 cases, it has.

That was the ruling of a federal district court in Iowa, which said the Patient Protection and Affordable Care Act (PPACA) did not amend the FLSA in such a way as to allow workers to take private action against their employers for failing to provide reasonable break time or a private room to express breast milk.

Lawsuit claims employer violated breastfeeding rules

After returning from maternity leave, a convenience store worker requested a private and secure place where she could express her breast milk.

She was told she could use the store’s office. The problem was there was a video camera in the office.

After she expressed her discomfort with the camera, the company refused to disable it but told her to place a plastic bag over the device when she was expressing milk (wonder what it would say if the store was robbed while the bag was over the camera).

Even with a bag over the camera, the worker was unable to relax, and she complained again.

She then received a series of reprimands.

So she sued, claiming:

1. The company had violated the PPACA by failing to provide her with a proper place to express her breast milk, and
2. It had retaliated against her for complaining, which is a violation of the FLSA.

The court threw the first part of the case out, ruling that private lawsuits against employers for violating the PPACA’s new breastfeeding rules cannot stand, since such complaints must go through the DOL.

But the court is allowing the retaliation portion of her lawsuit to proceed.

We’ll keep you posted.

Cite: Salz v. Casey’s Marketing Co.

After all, for many, this will be the first time they’ll see just how much they’re paying for their 401(k) account.

Why it matters

And you can’t blame them for their concern. Even the smallest difference in fees can make a huge difference in workers’ total retirement savings.

The DOL uses this example to drive the point home: If an employee with 35 years to retirement and a 401(k) balance of $25K sees an average return of 7% and pays .5% in plan fees, he’ll have $227K socked away by retirement. However, if that same employee pays an average of 1.5% in fees, his 401(k) will only grow to $163K.

That’s why it’s critical for employers to start preparing now for worker’s questions and concerns.

Liz Rowell from the award-winning benefits communication provider Benz Communications, offers the following best practices when it comes to communicating your company’s 401(k) fees with employees:

1. Put it in perspective

At first glance, the fees workers are paying may seem a bit jarring to them. So make it a point to tell them the whole story.

Remind them about all of the features and tools their retirement plan includes — tax deferrals, company matching and all of the education tools your plan includes (financial education sessions, online tools, etc.).

Once they see all they’re getting for their money, they should be less upset by the fees.

2. Use tools at your disposal

Talk to your provider about the different ways you can show employees what they’re getting for their money.

Your provider may have online tools that can show employees how your company plan outperforms — and costs less than — individual accounts.

Or, better yet, your providers’ reps may be able to explain the differences between individual and group plans to your employees in person.

• Electronic copies are OK. The DOL’s new FAQ says plan sponsors are allowed to provide health plan participants with electronic SBCs in connection with their online enrollment or renewal of coverage. SBCs can also be provided electronically to participants and beneficiaries who request one online. But in any case, plan sponsors must offer the option to receive paper SBCs.
• SBCs must be provided upon application. The FAQ states insurance plans or issuers must provide an applicant with an SBC “as soon as practicable,” but no later than seven business days after receiving a “substantially complete application” for a health insurance product.
• When changes occur. If the information required to be in the SBC changes (generally due to negotiations about coverage that take place after an application is submitted), an updated SBC is not required to be provided until the first day of coverage, unless an updated version is requested earlier.
• OK to reference other documents. As long as the SBC — on its own — contains all the info required of it under the healthcare reform law, it can include a reference to another document in the SBC footer (including reference to a summary plan description). An SBC can also refer to specific pages in other documents to supplement or elaborate on the information it contains.

Info: For our breakdown of the last FAQ on the Summary of Benefits and Coverage requirement, click here.

Thinking about waiting until the Supreme Court rules on health reform’s fate to comply with the law? Here’s why that’s a terrible idea.

For the first time since the health reform law went into effect back in 2010, the DOL has begun auditing health plans to make sure they’re complying with the law.

What now?

Even if the High Court does strike down the entire law, employment law attorneys expect the feds to hold firms responsible for any violations that were made while the law was still on the books.

That means it’s in employers’ best interest to take a business-as-usual approach to complying with the law now.

Of course, it doesn’t hurt employers to look for aspects of their plans they may want to change if the law is struck down – and talk to their providers about how to make that happen (Supreme Court is expected to rule by June).

In the meantime, here’s a breakdown of what the DOL will be looking for from employers when it comes to healthcare reform compliance.

Grandfathered plans

As you know, a grandfathered plan is any plan that was in place as of March 23, 2010 (the day the health reform law went into effect).

Grandfathered plans facing a DOL audit will need to furnish auditors with a number of documents to validate that status.

Here’s what the DOL expects:

• A statement – contained in all plan materials – explaining why the health plan is grandfathered under the definition in the health reform law (you can find an example of model language for this statement here), and
• Records which show the health plan as it was on March 23, 2010, as well as supplemental documents that can help verify the plan’s status.

Non-grandfathered plans

Of course, most health plans fall into the non-grandfathered category. That means the plans are required to comply with the reform law’s mandates as soon as they take effect.

To prove plans meet the law’s requirements, the DOL wants to see an array of documentation, which includes:

• Documents that relate to preventive services for each plan year (after Sept. 23, 2010)
• The health plan’s internal claims and appeals procedures
• First and final notices of adverse benefit determinations, and
• Contracts/agreements with independent review organizations or third-party administrators that are providing an external review.

All plan types

Under the current health reform law, there are certain provisions that both non-grandfathered and grandfathered health plans must comply with (e.g., the Summary of Benefits and Coverage rule).

Therefore, all plans will be required to show the DOL the following documents in the event of an audit:

• A sample of the plan notice that describes enrollment opportunities for dependents up to the age of 26
• A list of any plan participants who had their coverage rescinded and the reasons for that cancellation, and
• Any documents that have to do with new annual or lifetime limits on the plan’s benefits.

Answer: Technology.

Computers are making it easier for state inspectors to nab businesses without workers’ compensation insurance policies.

And the result is more inspections and more fines.

Since the start of 2012, Georgia has issued $480,000 in fines to the 538 businesses found without comp policies, according to The Newnan Times-Herald.

These companies will also have to pay a total of $1.2 million in premiums to come into compliance.

And all it took was four compliance officers and four inspectors to find the violators, Richard Thompson, chairman of the State Board of Workers’ Compensation, told the Times-Herald.

The board used to rely on complaints and random checks to uncover violations.

Now, inspectors can check a national database to see if a business is paying premiums for comp coverage — and they can do it from laptops in their cars.

In the time it takes to conduct one physical inspection, 12 businesses can now be checked out using the database.

Inspectors also check to see if former violators have dropped coverage they were forced to buy in the past.

The Department of Labor’s even helping. State inspectors can cross check data from the DOL to see if employers paying unemployment insurance premiums are providing workers’ comp coverage as well.

The most frequent violators:

• Restaurants
• Retail stores, and
• Small construction companies.

The state now has a website that allows workers to check if their employers have workers’ comp coverage. If no coverage is found, it offers instructions on how to report a possible violation.

Georgia requires most employers with three or more full time, part time or seasonal employees to offer workers’ comp benefits. Any business found in non-compliance with required coverage requirements faces civil penalties of up to $5,000 per violation. Possible prison time could also result from non-compliance.

Source: “State cracks down on workers’ comp,” by Walter Jones, The Newnan Times-Herald, 4/4/12.